CVR Partners(UAN) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2024, the company reported net sales of $140 million, net income of$ 18 million, and EBITDA of $50 million [8] - Full year 2024 results included net sales of$ 525 million, operating income of $90 million, net income of$ 61 million, and EBITDA of $179 million [14] - The fourth quarter distribution was declared at$ 1.75 per common unit, with full year distributions totaling $6.76 per common unit [9][14] Business Line Data and Key Metrics Changes - Ammonia utilization rate for the year was 96%, with a record 102% at East Dubuque [9][10] - Total ammonia production for Q4 2024 was 210,000 gross tons, with 80,000 net tons available for sale [11] - UAN production reached 310,000 tons, sold at an average price of$ 229 per ton, while ammonia was sold at an average price of $475 per ton [11] Market Data and Key Metrics Changes - Ammonia sales volumes were stable, while UAN sales volumes decreased by approximately 3% due to challenging weather conditions [12] - Prices for ammonia increased by approximately 3%, while UAN prices declined by about 5% compared to Q4 2023 [12] - The market for nitrogen fertilizer products is tight, with strong demand anticipated for the spring planting season [13] Company Strategy and Development Direction - The company is focused on improving reliability and redundancy at its plants, with capital reserved for projects over the next two to three years [29] - Plans to utilize natural gas as an alternative feedstock to pet coke are underway, which could enhance operational flexibility [25][26] - The company aims to operate plants at utilization rates above 95% of nameplate capacity, excluding turnaround impacts [27] Management Comments on Operating Environment and Future Outlook - Management noted that geopolitical risks could impact the nitrogen fertilizer industry, particularly regarding energy and fertilizer markets [22] - The USDA estimates record high corn yields, which may drive demand for nitrogen fertilizer [19] - The company expects continued volatility in the market and is monitoring potential tariffs on foreign fertilizer imports [23] Other Important Information - The company reported a 40% reduction in total recordable incident rate compared to 2023, indicating improved safety metrics [10] - Total liquidity at the end of the quarter was$ 130 million, consisting of $91 million in cash and$ 39 million available under the ABL facility [17] Q&A Session Summary Question: Changes in customer ordering patterns due to Fed rate changes - Management indicated no significant change in customer ordering patterns, with continued ratable buying observed [33] Question: Timing of the Coffeyville project - The dual fuel project is expected to be approved and potentially executed in 2026, with construction starting this year if approved [39][40] Question: Impact of UAN demand due to higher urea prices - Management noted that tight urea supply has lifted both UAN and ammonia prices, with expectations of increased corn acreage leading to higher demand for nitrogen fertilizers [52][54] Question: Trends towards UAN versus ammonia usage - There is no significant trend towards UAN over ammonia; pricing dynamics will influence customer choices [58] Question: UAN presales for Q1 and Q2 2025 - Management confirmed a solid book of business for UAN and ammonia, with customers seeking more than what is available [61] Question: CapEx outlook for the year - Management expects no substantial change in reserves for CapEx, maintaining a comparable level for growth projects [65]